What Investors Can Learn From Pilots
Did you know the Model 299 "Flying Fortress" was the most advanced airplane Boeing ever made? It could fly faster and almost twice as far as the other bombers of its day - and carry more bombs too. It had an imposing 103-foot wing span, and it's four-engine instead of the usual two design made it an impressive sight for the United States Army.
On October 30, 1935 at Wright Air Field in Dayton, Ohio, a small group of Army brass gathered to watch the Model 299's test flight. It was supposed to be a mere formality. Major Ployer Hill, one of the Army's most experienced test pilots, roared down the tarmac and lifted the plane into the air, rising to about three hundred feet. Seconds later, the plane abruptly turned sideways and crashed into a fiery explosion, killing Major Hill and one other crew member.
The investigation later revealed that the cause of the crash was pilot error. The Flying Fortress was substantially more complex than previous airplanes. It required the pilot attend to four engines, each with a separate fuel-oil mix, retractable landing gear, wing flaps, and electric trim tabs that needed to be adjusted to maintain air speed. All of this had to be monitored while regulating the pitch of the propellers with hydraulic controls.
The Army opted for a less capable plane designed by Martin and Douglas. Military historian Phillip Meilinger explained that many thought the 299 was just "too much airplane" for one person to fly.
Still, some of the top Army brass thought the plane was flyable. So they came up with an interesting plan, and it didn't involve longer or more extensive pilot training. It was a very simple set of rules to be followed in a disciplined, repeatable fashion. Essentially, it was a naked strategy, although the Army called it a checklist. And with this strategy in place, the incredibly complex aircraft became much easier to fly. Test pilots logged almost two million miles without an incident.
Later, the US Army gave the Boeing 299 a new name. They called it the B-17. They ultimately bought over 12,000 of them, while the airplane played an integral role in the Allies victory over Nazi Germany.
This is another one of the stories that Atul Gawande retells in his book, The Checklist Manifesto. It's a terrific example of how a disciplined, repeatable process can take something incredibly complex - like flying a highly sophisticated airplane - and reduce it to a series of simply steps that can be successfully performed by an ordinary pilot. The same goes for investing; naked strategies apply a simple set of disciplined, repeatable rules to portfolio management, making it easy for everyday investors to do.
The investigation later revealed that the cause of the crash was pilot error. The Flying Fortress was substantially more complex than previous airplanes. It required the pilot attend to four engines, each with a separate fuel-oil mix, retractable landing gear, wing flaps, and electric trim tabs that needed to be adjusted to maintain air speed. All of this had to be monitored while regulating the pitch of the propellers with hydraulic controls.
The Army opted for a less capable plane designed by Martin and Douglas. Military historian Phillip Meilinger explained that many thought the 299 was just "too much airplane" for one person to fly.
Still, some of the top Army brass thought the plane was flyable. So they came up with an interesting plan, and it didn't involve longer or more extensive pilot training. It was a very simple set of rules to be followed in a disciplined, repeatable fashion. Essentially, it was a naked strategy, although the Army called it a checklist. And with this strategy in place, the incredibly complex aircraft became much easier to fly. Test pilots logged almost two million miles without an incident.
Later, the US Army gave the Boeing 299 a new name. They called it the B-17. They ultimately bought over 12,000 of them, while the airplane played an integral role in the Allies victory over Nazi Germany.
This is another one of the stories that Atul Gawande retells in his book, The Checklist Manifesto. It's a terrific example of how a disciplined, repeatable process can take something incredibly complex - like flying a highly sophisticated airplane - and reduce it to a series of simply steps that can be successfully performed by an ordinary pilot. The same goes for investing; naked strategies apply a simple set of disciplined, repeatable rules to portfolio management, making it easy for everyday investors to do.
1 Comments:
Great analogy!
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